Another year, another delay. It seems as if the only certainty in relation to the long awaited My Future Fund national auto-enrolment pension scheme has been that there will be another delay announced before long.
In April, Minister for Public Expenditure and Reform Jack Chambers indicated the possibility of another delay to the scheme to give employers breathing space to deal with the disruption caused by the Trump tariffs.
A few days later, Minister for Social Protection Dara Calleary confirmed that commencement of the collection of contributions for the scheme was being moved from September 30th, 2025, to January 1st, 2026, to align the new system with the standard tax year. He also said it was being delayed to give payroll providers time to prepare their systems for the launch and to give more time to employers to ensure compliance with the scheme’s requirements from the start.
Whatever the excuse, for the 800,000 people without occupational pensions coverage, that means yet more loss of income in retirement. The scheme was first mooted well over 20 years ago and as far back as 2016 the Government committed to a launch date of 2021. Several delays later, that has now moved to 2026.
All employees not already in an occupational pension scheme, aged between 23 and 60 and earning more than €20,000 a year, will be automatically enrolled in the My Future Fund scheme. It will be phased in over a decade, with employer and employee contributions each starting at 1.5 per cent and increasing every three years by 1.5 per cent until they reach 6 per cent by year 10. The State will top up contributions by €1 for every €3 saved by the employee.
While 3.5 per cent – the first year’s total contributions to the scheme – of a €25,000 salary might not sound like a lot, when compound growth is taken into account for the 35 years it could be invested in the fund, it amounts to over €4,000. That’s how much a single year’s delay could be costing a worker, and you can double that for those on the average income of €52,000.
In these circumstances, people need to ask if they are prepared to wait any longer for the new scheme to become a reality. It could be delayed again, after all. But that prospect is remote, according to Munro O’Dwyer, who leads PwC Ireland’s retirement and pensions consulting business.
“It’s all over bar the shouting,” says O’Dwyer. “They’ve appointed professional investment managers, and we are seeing tangible progress in other areas. I was never very confident in the September date. A midyear change like that is complicated from a tax perspective. But I would be very surprised if the January 1st, 2026, date is missed. I’m not suggesting everything has been done, but they will get there.”
He believes the scheme should be welcomed, regardless of the delays. “This is going to influence Irish society for all time, so I’m quite sanguine about how we got here. Getting it up and running is to be lauded.”
The question for individuals is, should they wait another six months to start their pension savings?
“While some might view the delay as disappointing, there are several alternatives to start saving now, including personal retirement savings account arrangements,” says Deloitte Tax & Legal director Jenny Meade. “The conventional wisdom is that it is best to begin saving for retirement earlier. On this basis, starting now makes sense. It will be possible to switch to the State scheme once it has commenced.”
Employers also have decisions to make. For those with an existing scheme, things can get a bit complicated if not every employee is enrolled in it. In those circumstances, the employer faces the prospect of having to run their own scheme and My Future Fund side by side with the additional costs and administrative burden that entails.
They could incentivise employees to join the scheme and then make it mandatory for all new hires, thereby avoiding interaction with the State scheme. They could do that by offering a non-contributory option for employees, for example.
“The primary objective is not to get people to join the auto-enrolment scheme – the goal is to increase pension coverage generally,” says O’Dwyer. “There is nothing to stop an employer having a 2 per cent employer contribution and not require an employee contribution for those with affordability issues.”
For employers without an existing scheme, it’s a straightforward choice between setting one up now or waiting for the State scheme. Munro’s view is that the fees and costs associated with setting up a private scheme will likely be significantly higher than the cost of compliance with the State scheme, so it is probably best to wait.
However, Ashling O’Neill, a certified financial planner with Clear Financial, disagrees.
“I truly believe it’s better for employers and employees to have a private scheme in place,” she says. “Employers have control over the contributions and how the scheme is managed. Also, private schemes are generally more generous than the 1.5 per cent employer contribution that auto-enrolment will start with. There is no option for either the employer or the employee to go above the prescribed levels or to make additional voluntary contributions in the State scheme.”
There is also the impact on an employer brand to be considered. “Companies that have their own private scheme will be compared favourably with those that only offer auto-enrolment,” says O’Neill. “It is likely that auto-enrolment will be seen as very basic and a private scheme will be perceived as being a premium offering.”
